Standard Chartered Bank PLC, one of the leading financial institutions in Ghana, has undergone a remarkable financial turnaround, moving from a loss-making position in 2022 to a profitable stance in the 2023 financial year.
According to the financials posted by the Ghana Stock Exchange (GSE), the bank reported a staggering profit of GH¢864.4 million, compared to a loss of GH¢299.6 million in the previous year.
This significant transformation comes in the wake of challenges faced by the bank, particularly stemming from the government’s Domestic Debt Exchange Programme (DDEP).
The DDEP, initiated to restructure Ghana’s debt stock which had reached unsustainable levels, had a severe impact on the profitability of banks across the country.
The program, characterized by a voluntary invitation to holders of selected government debt instruments to exchange them for new bonds with altered rates and maturities, led to value losses for investors, including banks.
Despite engagements with the Ministry of Finance and assurances of regulatory forbearances, banks, including Standard Chartered, participated in the program, resulting in impairment losses and the recognition of significant impairment losses according to a report by PwC, an international accounting and auditing firm.
Amidst these challenges, the bank witnessed remarkable growth in various aspects of its operations. Deposits from customers surged from GH¢8.2 billion in 2022 to a remarkable GH¢10.8 billion in the last year, indicating customers’ high confidence in Standard Chartered as one of the top-performing financial equities on the local bourse.
While the bank’s stated capital remained unchanged at GH¢400 million, its income surplus experienced an exponential increase from GH¢148.3 million in 2022 to GH¢820.8 million in the 2023 financial year.
Shareholders’ funds also saw a substantial rise from GH¢1.3 billion to GH¢1.9 billion, with the net assets value per share climbing from GH¢9.78 to GH¢14.26 during the same period.
Additionally, the bank’s loans and advances to customers witnessed a slight increase from GH¢2.05 billion in 2022 to GH¢2.10 billion in the last year.
Other Financials
However, in 2023, the bank reported a net trading income of GH¢217.5 million, marking a slight decrease from the previous year’s figure of GH¢239.4 million. The percentage decrease revealed a 9.15% decline in net trading income compared to the preceding year.
The bank also reported derivative assets held for risk management totaling GH¢8.92 million, representing a significant decrease from the previous year’s figure of GH¢69.7 million. This calculates to a substantial percentage decrease of approximately 87.2%.
Such a sharp decline in derivative assets held for risk management suggested a strategic shift or a reduction in the bank’s exposure to certain types of risks, potentially indicating a more conservative risk management approach.
While a lower value of derivative assets may indicate reduced risk-taking, it could also signify a more cautious stance towards market fluctuations and volatility.
In terms of tax contributions to the government, Standard Chartered paid a substantial amount of GH¢486.9 million, compared to GH¢83.9 million in the previous year, encompassing income tax, Growth and Sustainability Levy, and Financial Sector Clean-Up Levy.
The Financial Sector Recovery Levy (FSRL) in Ghana is a special levy imposed on banks to raise revenue and support financial sector reforms. The FSRL, enacted under Act 1067, imposes a 5% levy on the profit before tax of banks.
Moreover, the bank’s total impairment reduced significantly from GH¢1.15 billion in 2022 to just GH¢220.3 million, reflecting efforts to manage risks and improve asset quality.
The impressive financial performance of Standard Chartered Bank PLC amidst challenging circumstances underscored its resilience and strategic management, positioning it as a key player in Ghana’s banking sector. It also demonstrates its commitment to delivering value to stakeholders while navigating through a dynamic economic landscape.
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